NHB to raise up to $200 million next quarter via ECB route

MUMBAI: National Housing Bank (NHB) today said it will raise up to USD 200 million in next quarter under the new ECB window allowed by the Reserve Bank.

"We are looking at raising up to USD 200 million under the new external commercial borrowing (ECB) window opened by RBI for low-cost housing. We will soon approach RBI for its permission. The money will be used to fund retail housing," NHB Chairman and Managing Director R V Verma told reporters.

Going forward, the housing finance regulator will also try to raise funds on behalf of developers who are into low- cost housing, he said here.

"Our funds will be used to finance low-income households by way of credit to housing finance companies (HFCs) on pre- condition that the fund is used only to build affordable houses," Verma said.

Even though home sales are falling in almost all the major markets, Verma said he is expecting a 20 per cent growth in housing finance this fiscal.

On December 17, the Reserve Bank allowed real estate developers and housing finance companies to raise up to USD 1 billion through ECBs in the current fiscal to promote low-cost residential projects.

The funds raised through ECBs could be used either for developing low-cost housing projects or for providing loans up to Rs 25 lakh to individuals for buying units with a price tag of Rs 30 lakhs or less, RBI had said in a circular.

ECBs are considered attractive option as cost of raising the loan overseas is lower than that of domestic borrowings. Besides, they provide an additional avenue to access large amounts of funds from global financial markets.

As per RBI guidelines, developers/builders with a minimum track record of five years in undertaking residential project will be eligible to raise ECBs.

With regard to HFCs, RBI said companies with a minimum paid up capital of Rs 50 crore and minimum net owned fund of Rs 300 crore would be eligible to raise ECBs.